15 MB - Great Lakes Maritime Research Institute

productive) than mandating change to biodiesel fuel. This research includes: review ofthe economics of emissions regulation strategies (of which carbon credit trading is one);study of appropriate caps on emissions levels; quantifying the variety of incentives thatencourage consumer compliance with regulatory caps; and comparing economic benefitand cost to various stakeholders. These strategies are taken up in Chapter 5:Recommendations to this report.3.2 Demand and Supply for Great Lakes Maritime Biodiesel FuelThe fuel tested for this study was specifically derived from soybean feedstock andblended as B2 fuel. Therefore the following discussion will present supply chaininformation based on these two attributes and generally constrained to the study area forGreat Lakes maritime commerce.The supply chain for biodiesel demand and supply production and delivery is madecomplicated by vertical integration of processes at various points in the supply chain. Forinstance, producers and distributors are often the same entity, as are distributors andretailers. This industry started with small independent entrepreneurs, with demand as agrass roots movement at large, however large and global scale production is growing, forinstance the aggressive Brazilian project, so that the small players are destined to besubsumed into conglomerate structures. For our analysis, the changing nature of thesestructures, and the volatile production and pricing associated with these dynamic changesmake modeling the industry in its infancy beyond the scope of this project. An analogycan be drawn with the computer industry, when the industry was first beginning therewere many independent producers trying to meet growing demand. Eventually the lowcost producers were able to force the independent producers out of the industry andcapture more and more market share. Thus, the moving target of capturing data to showtrends and industry structure, as we attempt to do below, is challenging.3.2.1 DemandDemand will be presented first from the larger national perspective, then from the GreatLakes and maritime perspectives. The national overview of transportation energy crudeoil consumption is shown in the graphic below. Data from the Transportation EnergyData Book 2005 shows that U.S. marine petroleum demand was approximately 0.43million barrels per day, or 157 million barrels per year in 2002, or 8.6 billion gallons ofcrude oil demand for the total domestic U.S. marine sector.16